The Development Centre: A bridge between the OECD and emerging regions • Membership of the Development Centre With a Governing Board open to OECD non-member countries, the Development Centre provides a framework for dialogue and experience sharing with emerging regions all over the world. • Three Latin American countries are members of the Centre: – Mexico – Chile – Brazil

Latin American Economic Outlook: The key tools • Informal Advisory Board: Scholars and policy makers from Latin America and OECD countries enrich the analytical work of the project. • Research and Publications: The Development Centre collaborates with OECD experts, international organisations and various Latin American think-tanks. • Dialogue Forum: Key government officials from OECD and Latin American countries share experiences about the design and implementation of public policies.

I II IV Fiscal Policy and Legitimacy Pensions, Capital Markets and Corporate Governance Multinationals, Telecommunications and Development China, India and the Challenge of Specialisation

Fiscal policy plays a very limited redistributive role, especially taxation Public spending is a key instrument for tackling inequality (% change in inequality) The effects of taxes and transfers Points of Gini change Gini coefficient Inequality before and after taxes and transfers Source: OECD Development Centre, 2007. Based on data by Goñi, López, and Servén (2006)

There is no Latin curse: Quality of fiscal policy is not a matter of DNA Fiscal policy is more efficient in Europe (even in its Latin countries) in reducing inequalities and stimulating social cohesion Gini coefficient Inequality before and after taxes and transfers Source: OECD Development Centre, 2007. Based on data by Goñi, López, and Servén (2006).

I II IV Fiscal Policy and Legitimacy Pensions, Capital Markets and Corporate Governance Multinationals, Telecommunications and Development China, India and the Challenge of Specialisation

Pension Reform in Latin American Countries • Latin America is at the forefront of pension reform. – Chile launched the process in 1981 and many countries in Latin America and Eastern and Central Europe have found inspiration in the Chilean experience. • More efforts are needed in refining the mechanisms in various countries to improve: – 1) commercial practices 2) competence and administration of pension funds 3) investment regulations and 4) the contributions paid by members. • Improving the social dimension of pension reform is also necessary to: – 1) extend coverage 2) ensure timely payment of contributions 3) enhance efficiency of management of funds and 4) reduce costs to members.

Pension reform has had a mixed impact on national savings Source: OECD Development Centre (2007), based on World Bank Development Indicators.

But they have become a force for the development and deepening of financial markets Pension Fund Assets as percentage of GDP, 2006 Source: OECD Development Centre (2007), based on Global Pension Statistics database.

I II IV Fiscal Policy and Legitimacy Pensions, Capital Markets and Corporate Governance Multinationals, Telecommunications and Development China, India and the Challenge of Specialisation

Latin America is the world’s first destination for FDI in telecommunications Source: OECD Development Centre, based on PPI Database, World Bank Source: Information and Communications for Development 2006, World Bank

Investment in telecommunications has accompanied a marked increase in connectivity The number of telephone lines has multiplied by 10 in Latin America, to some extent because of foreign investment Foreign Investment in Telecommunications and connectivity Cumulative Foreign Investment in Telecommunications (in USD billion) Telephones per 100 inhabitants 120 100 80 60 40 20 0 1995 2000 Source: OECD Development Centre, based on SEDLAC (2007) and IADB (2007) data. 2005

However, the connectivity boom has not benefited all in the same way Inequality is high: a quarter of poor households have a telephone at home, 3 times less than high-income households Proportion of the population with a telephone at home Richest quintile Poorest quintile 1 0. 8 0. 6 0. 4 Source: OECD Development Centre, based on SEDLAC surveys. Haití Nicaragua Perú Bolivia Paraguay México Costa Rica Brasil Argentina 0 Chile 0. 2

Much remains to be done in order to guarantee contestable markets… Perfect competition Source: OECD Development Centre, based on companies’ data. Monopoly

I II IV Fiscal Policy and Legitimacy Pensions, Capital Markets and Corporate Governance Multinationals, Telecommunications and Development China, India and the Challenge of Specialisation

Emerging economies are increasingly present on the global scene When the OECD was founded, its member countries accounted for 75% of world GDP, today they represent 55% of world GDP Source: OECD Development Centre, based on Maddison (2003) “The World Economy Historical Statistics”

The rise of China and India also represents a wake -up call: The challenges of specialisation Latin America risks to fall on an excessive raw-material specialisation Source: OECD Development Centre, 2007. Based on WITS and Comtrade data.

Exploiting comparative advantages: The proximity to export markets Mexico benefits from its geographic proximity to its major export markets 24 Days 11, 700 Km 4 Days 160 Km Shipping time Mexico is more competitive in manufacturing more sophisticated products which require short delivery times